Diluted Earnings per Share—Stock Options
Ugrumov Technology Co. provides the following data at December 31, 2008.
|
Operating revenue |
$1,120,000 |
|
Operating expenses |
$600,000 |
|
Income tax rate |
30% |
|
Common stock outstanding during the entire year |
26,000 shares |
On January 1, 2008, there were options outstanding to purchase 15,000 shares of common stock at $25 per share. The average market price during the year was $35 per share. The balance sheet reports $240,000 of 7% nonconvertible bonds at December 31, 2008. (Interest expense is included in operating expenses.)
Instructions:
1. Compute basic EPS for 2008.
2. Compute diluted EPS for 2008.